Correct data entry of your management fees is crucial in the income of your rent roll. Knowing your software is pivotal to efficient and correct data entry. We often see the same errors cropping up when it comes to fee entry.
For instance, we see agents enter letting fees as 100% as opposed to 110% (one week + GST). Or entering fees as excluding GST when they should be including GST. As an example, the management fee on the agency agreement is 5.5% including GST. However, it is entered in the software as 5% only.
It is essential to set up fees correctly when starting a new management. The fact is data entry errors affect the value of your rent roll. Let’s look at a data entry example and you can see the roll-on effect it has on the value of your rent roll.
An Example: How Data Entry Errors Can Impact Your Rent Roll Income.
An agent incorrectly enters the management fees as 5% instead of 5.5% as per agency agreement.
| Rent | Period | Annual Income | Mgmt Fee | Net Income |
|---|---|---|---|---|
| $1,000 | 52 | $52,000 | 5.50 | $2,860.00 |
| $1,000 | 52 | $52,000 | 5.00 | $2,600.00 |
The difference is $260 per year.
Well, you may be saying that’s not so bad? Well, true, if you only have one property on your rent roll. What if you have 100 properties? That small $260 now equates to a whopping $26,000 in lost revenue per year.
How Can You Ensure Accurate Data Entry?
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Fee audits
Run software reports and cross-reference against agency agreements.
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Internal checklists
Every staff member has to tick off the steps when entering a new management.
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Regular training
Make sure new staff are aware of the process for entering fees and new managements.
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Policy and Procedure Manual
Regular updates and acknowledgement from staff members.
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For Cloud Software Users
Know your software. If you’re unsure if the software is Inclusive of GST or Exclusive of GST, ask the provider.
– Jane Morgan is the Licensee in Charge of Rent Roll Angels & Director at End of Month Angels. Jane isn’t just your average broker, she is an industry veteran with over 23 years in the industry, 15 years as a Property Manager and an active Real Estate trainer. She knows the pitfalls & successes of rent roll acquisitions like the back of her hand. Contact Jane today to discuss your rent roll requirements.